As 2022 heads toward the finish line, there is still much for letting agents to be aware of for the next few months and next year. Tenants, agents, and landlords are all affected by upcoming adjustments. Letting agents in particular need to ensure they’re up-to-date with upcoming policy changes, new government proposals, and the constant shifts in the property industry.
As it stands, now is the most profitable time to invest and grow your property portfolio, simply due to high demand and limited supply. With inflation at 8.8% and salaries not altering to match, people are less likely to become homeowners with changing mortgage rates, and are likely to save their cash instead.
Supply in the UK for rental properties is tight. The war currently taking place in Ukraine has led to overseas investors and international buyers pulling out of the property market, mainly due to the increasing uncertainty. This in combination with the current cost of living crisis means trouble on the horizon.
However, this may mean a decrease in void periods as renters will be more likely to renew their current leases.
As tenant demand has been extremely high for the past year, and the number of private landlords are predicted to decrease due to newly released legislation, rents may rise significantly through there being a lack of replacement landlords. As a result, existing agents may find themselves managing more properties, subsequently growing their portfolio.
It is therefore vital agents ensure they fully understand their landlord and tenants’ expectations to reassure them during such an uncertain period. Using an optimised application process will help ensure suitable tenants are considered in line with the landlords’ requirements.
Rent prices are on the rise, as Zoopla recently reported an 11% increase to an average of £995 per month in the last year. Fortunately for those in lettings, this may bring a higher yield on their portfolio as a result.
An increase in house prices across the UK may mean scalability and smart investments may become increasingly difficult. In addition, Scotland recently put in place a rent freeze in an effort to help those struggling with increasing bill prices. For those aiming to utilise high rents for increased ROI, you will have to become a more appealing option to prospective renters.
Rural areas of the UK hold the cheapest monthly average on rent, with Newcastle holding the cheapest average of around £659 per month. Belfast, Glasgow, Birmingham, Leeds, and Nottingham follow with a monthly average ranging between £600-£720. Agents may therefore find it beneficial to consider finding valuable connections with landlords and expanding their portfolio in areas such as these.
Such reduced rent prices make these areas an increasingly popular choice for renters, making the process of attracting tenants in urban areas difficult. To attract new tenants, you need to become an appealing choice. Using efficient systems to streamline lengthy tasks can help maintain tenant satisfaction, and ease the sting of increased rent.
Property prices are at a historic high, and rental properties are becoming increasingly rare. Tenants are therefore becoming desperate, meaning bidding wars and haggling has become a common occurrence when an affordable property is up for lease.
Property professionals have noticed a significant change in the industry. Sarah Evans (Managing Director at Cardea Lettings) explained how throughout her career, she’s never “seen this with supply and demand.” Sarah spoke about how “I put a room to rent on the market on Monday afternoon around 2 o’clock… I got 37 messages in the first 2 hours.” This complicates the screening process due to such a high volume of applications. Sarah further explains “It’s kind of like applying for a job now… A lot of applicants have no chance”, which ultimately speeds up the process of finding the best viewing candidates.
After all this, the next stage is deciding on the ideal tenant. By creating a personalised form for applicants who meet your requirements can streamline the process and help to eliminate time wasters. Refurbishing your current properties can help attract and retain tenants, making your properties a more appealing option.
What else should letting agents know?
Agents should be aware of upcoming changes and proposals planned for the remainder of this year, 2023, and even 2024. The majority of the planned changes in legislation focus on landlords, however letting agents should be aware they’re still responsible to ensure compliance.
A huge topic of conversation within the property industry is the recently proposed Renters Reform Bill. Although it isn’t expected to become legislation until 2024 at the earliest, there are concerns across the industry regarding what this means for landlords seeing as the new bill seems to be in the tenant’s favour.
To learn about more upcoming changes and proposals affecting property professionals across the industry, download our eBook, “Everything letting agents should know before 2023”.
*Disclaimer: please note this blog is only intended as a guide, and is not to be taken as legal advice.*